MicroRNAs are a recently discovered set of regulatory genes that constitute up to an estimated 1% of the total number of genes in animal genomes, including C. elegans, Drosophila, mouse, and humans (Lagos-Quintana et al. 2001,Lai et al. 2003,Lau et al. 2001, Lee et al. 2001, Lee et al. 1993,Lim et al. 2003). In animals, microRNAs regulate genes by attenuating protein translation through imperfect base pair binding to 3' UTR sequences of target genes. A major challenge in understanding the regulatory role of microRNAs is to accurately predict regulated targets. We have developed an algorithm for predicting targets that does not rely on evolutionary conservation. As one of the novel features of this algorithm, we incorporate the folded structure of message RNA. Using Drosophila microRNAs as a test case, we have validated our predictions in 10 of 17 genes tested. One of these validated genes is mad as a new target for bantam. Further, our computational and experimental data suggests that microRNAs have fewer targets than previously reported.